Double auction prediction markets have proven successful in large-scale applications such as elections and sporting events. Consequently, several large corporations have adopted these markets for smaller-scale internal applications where information may be complex and the number of traders is small. Using laboratory experiments, we test the performance of the double auction in complex environments with few traders and compare it to three alternative mechanisms. When information is complex we find that an iterated poll (or Delphi method) outperforms the double auction mechanism. We present five behavioral observations that may explain why the poll performs better in these settings.information aggregation, prediction markets, mechanism design
A n extensive literature on reputation signaling in prosocial settings has focused on an intrinsic desire for positive reputation. In this paper, we provide experimental evidence that some individuals are averse to both positive and negative reputation and will therefore respond to visibility by signaling that they are an "average altruism type" relative to their audience. We formalize our hypotheses about "wallflower" behavior in a theoretical model. Our experimental results show that instead of uniformly increasing contributions, visibility draws contributions toward the middle of others' contributions. As a result, visibility is associated with higher levels of giving only in scenarios where others are giving a large amount. We also observe heterogeneity in reputation concerns: wallflower behavior is particularly strong for women and can be observed in several different settings.Data, as supplemental material, are available at http://dx.
This article unpacks the psychological influence of a Muslim cleric’s power to mobilize for collective action in an experiment in Afghanistan. The same cleric requests contributions for a hospital from day laborers when dressed as a civilian and as a cleric. InCiviliancondition, 50 per cent contributed and 17 per cent made large contributions; inClericcondition, 83 per cent contributed but average giving did not increase as most gave the smallest possible amount. Inclusion of a recitation of Qur’anic verses in theClericcondition maintains the 82 per cent contribution rate while increasing large contributions to 30 per cent, doubling average contributions. Formal education and subjective perception of poverty appear to drive the opposing effects of cleric and scripture. These results suggest that the power to activate spiritual channels lies in the scripture, not with the human wielding religious authority, who instead appears to induce minimal compliance with Islamic norms of charitable giving.
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